Rising prices of raw materials and food boosted the city's producer prices in the first quarter, the Shanghai Statistics Bureau said yesterday.

The city's factory-gate inflation gauge rose 1.9 percent in the first three months from a year ago. The rise in prices expanded monthly with the Producer Price Index rose in January, February and March by 1.5 percent, 1.7 percent and 2.4 percent respectively.

"The rise in producer prices was led by higher costs of raw materials and uncurbed food prices," said Lu Yuhua, an analyst at the bureau. "Price hikes in the international markets and the snowstorm in China in late January triggered the fast rise in local prices."

Compared with the same period last year, the cost of raw materials rose 5.4 percent in January. The figure climbed to 9.2 percent in March. For the three months combined, the costs jumped 7.1 percent, with coal, ore and petroleum sectors showing strong rises.

In February, Shanghai-based Baosteel Group signed an agreement with Brazilian Companhia Vale do Rio Doce accepting 65-percent and 71-percent price increases in two types of iron ores.

Food prices rose rapidly, fueled by the worst snowstorm to hit the country in five decades.

Factory-gate food costs advanced 32.7 percent in the first quarter. Edible plant oil prices rocketed 60.7 percent.

"The regulator has imposed temporary price intervention over some key food categories. The edible oil prices and some others are expected to decline in the second quarter," said Lu.

The rising costs have added pressure to some businesses in China, where producer prices rose 6.6 percent in February to a four-year high.

But Chinese businesses were positive over their prospects. The business confidence index compiled by the National Bureau of Statistics rose to 140.6 in the first quarter from 139.6 in the previous quarter.

(Shanghai Daily April 11, 2008)